Chapter I. General Principles
Section 3. Premiums
(Payment of Premiums)
Premiums are categorized into two kinds: those to be paid in a lump sum, and those to be paid in installments. A lump-sum premium, if such is stipulated in the insurance contract, or the first installment of the premium, shall be paid before the contract takes effect. However, this requirement does not apply where the premium has not yet been determined at the time the insurance contract is entered into.
(Obligor to Pay Premiums)
Premium shall be paid by the proposer in accordance with the provisions of the insurance contract. Where a trust enterprise is obligated under a trust agreement to pay the insurance premiums, the trust enterprise shall pay the insurance premiums in the proposer's stead.
The insured amount, set forth in the trust agreement referred to in the preceding paragraph, which the insurer is obligated to pay in accordance with the insurance contract shall be deemed to be a trust property of the trust agreement.
When a proposer enters into an insurance contract for the benefit of another person, the insurer may raise the same defense against the beneficiary that it may raise against the proposer.
(Refund of Premium for Double Insurance in Good Faith)
If multiple insurance contracts entered into in good faith cover the same insurable interest and the same insured event, and the total insured amount exceeds the value of the subject matter insured, the proposer may, prior to occurrence of the risk, claim a refund of the premium in proportion to the excess value.
If an insurance contract becomes void due to the circumstances set forth in Article 37, the insurer may still collect premium during the period in which the insurer is unaware that the contract has become void.
(Refund of Premium for Relative Invalidity and Termination of a Contract)
If an insurer is not bound by an insurance contract because of circumstances set forth in Article 51, paragraph 2, the insurer may claim reimbursement of expenses. Premium already collected need not be refunded.
If a proposer is not bound by an insurance contract because of circumstances set forth in Article 51, paragraph 3, the insurer may not claim payment of premium or reimbursement of expenses; where already collected, they shall be refunded.
If an insurance contract is terminated or partially terminated because of circumstances set forth in Article 60 or Article 81, premium paid for the period subsequent to termination shall be refunded, except where the premium is not calculated on the basis of time.
(Refund of Premium for Rescission of a Contract)
If an insurance contract is rescinded because of circumstances set forth in Article 64, paragraph 2, the insurer need not refund premium already collected.
(Reduction of Premium and Refund of Premium for Termination of a Contract)
Where premium is calculated based on special circumstances pertaining to increased risk as stipulated in the insurance contract, and such circumstances cease to exist during the term of the contract, the proposer may demand a pro rata reduction of premium based on the premium rate at the time the contract was entered into, to apply from the time the circumstances ceased to exist.
If the insurer does not agree to a reduction of premium as set forth in the preceding paragraph, the proposer may terminate the contract, and any premium paid for the period subsequent to termination shall be refunded.
(Refund of Premium for Termination of a Contract due to Bankruptcy from Insurer)
If an insurer becomes bankrupt, its insurance contracts terminate on the day that bankruptcy is adjudicated, and any premium paid for the period subsequent to termination shall be refunded by the insurer.
(Refund of Premium for Termination of a Contract due to Bankruptcy of Proposer)
If a proposer becomes bankrupt, the insurance contract remains valid for the benefit of the creditors of the bankrupt party. However, the bankruptcy trustee or insurer may terminate the contract within three months from the day of the bankruptcy adjudication. Any premium paid for the period subsequent to termination shall be refunded.